THE VOICE OF MARINE

UK offshore wind industry achieves low-cost goal

The costs for offshore wind production have been brought down to £100/MWh, a report by The Offshore Wind Programme Board (OWPB) has found. The UK Government aimed at achieving this by 2020, which means this target has been achieved four years ahead of forecast. Cost data gathered from the sector shows that UK projects reaching their final investment decision (FID) in 2015/16 are achieving an average levelised energy cost of energy (LCOE) of £97/MWh. This is a 32% reduction from £142/MWh for projects reaching FID in 2010/11.

The findings of the report show that while the industry has seen cost reductions thanks to the early adoption of larger turbines, increased competition and the lower cost of capital. This will also ensure that the cost of offshore wind energy will continue to fall over the next decade.

“The early achievement of the 2020 target demonstrates that offshore wind can play a significant role in the UK’s low carbon future. In 2017, the UK Government will run a second contract auction round and has committed to further rounds with decreasing administrative strike prices to help ensure cost reduction,” the board said.

The survey of industry has highlighted that competition between developers is playing an important role in ongoing cost reduction, with industry confident that these auctions will deliver further cost reductions.

Recommendations for the OWPB:

1. Ensure further cost reduction beyond 2020 and maximise UK economic benefit through an agreed set of cost reduction priorities, timescales and monitoring process for collaborative actions across the sector

2. Work with government to encourage and support investment in the UK supply chain. This should be built on a coordinated approach to industrial strategy, maximising the supply chain synergies between fabrication, assembly, port infrastructure, operations and maintenance and other sectors

3. Identify and exploit opportunities to reduce development, consenting and deployment risk in the UK, consider improved coordination of government policy implementation (energy and environment) and review successful policy and regulation from other European markets that could enhance the UK framework

4. Continue to work with government via the Offshore Wind Industry Council (OWIC) on plans for further auction rounds and longer term visibility of the market that would enable it to achieve its maximum potential